Harvard economist Kenneth Rogoff fears a new global economic crisis like the one in 1929 in view of the global "lockdowns" in the fight against the corona virus - and calls on governments to come up with larger aid packages: "This shock is unique and cannot be compared to any since the Spanish flu of 1918/19. We are experiencing the first truly global crisis since the Great Depression," Rogoff told the business magazine "Capital".
The governments in the US and Europe must use all their fiscal leeway to combat the consequences of the crisis. "It's like war. The USA should spend a trillion dollars without batting an eyelid," said the economist and expert on financial crises. "And this is probably just the first step." Even the reaction in Europe is still not enough. "Even Europe would have to spend up to a trillion dollars." Only with enormous efforts could there be a rapid recovery.
Support people directly with money
In concrete terms, the former chief economist of the IMF called for three forms of financial assistance: First, massive investment and the expansion of emergency health care facilities. Secondly, direct aid for sectors that are now sliding into crisis through no fault of their own - such as the tourism and catering industries, but also the aviation industry. And thirdly, above all, people on low incomes should be supported directly with money.
Germany must do even more
According to Rogoff, Germany has taken the right steps so far - but must do more. Since the country has a good budget balance and a national debt ratio of only 60 percent of economic output, Germany could double its debt ratio if necessary. "It wouldn't be the end of the world." This crisis has the potential to cause "permanent and enormous damage, even if we are out of the crisis in a year. That is, so someone would hit the pause button on the economy. pm, ots, mei